geo · 2017, which have transitioned geo energy from being primarily a coal mining service provider...

GEOE N E R G Y R E S O U R C E S

2Q2019 Results Briefing 29 August 2019

KH Tung, CEO

Forward Looking Statements

This presentation contains statements that are, or may be deemed to be, “forward looking statements” which are prospective in nature. These forward lookingstatements may generally be identified by the use of forward looking terminology, or the negative thereof such as "plans", "expects" or "does not expect", "isexpected", “seeks”, "continues", "assumes", "is subject to, "budget", "scheduled", "estimates", "aims", "forecasts", "risks", "intends", "positioned", "predicts",“projects”, "anticipates" or "does not anticipate", or "believes", or variations of such words or comparable terminology and phrases or statements that certainactions, events or results "may", "could", "should", “shall”, "would", "might" or "will" be taken, occur or be achieved. Such statements are qualified in theirentirety by the inherent risks and uncertainties surrounding future expectations. Forward-looking statements are not based on historical facts, but rather oncurrent predictions, assumptions, expectations, beliefs, opinions, plans, objectives, goals, intentions and projections about future events, results of operations,prospects, financial condition and discussions of strategy, any of which could prove to be inaccurate. By their nature, forward looking statements involve knownand unknown risks and uncertainties, many of which are beyond the control of Geo Energy Resources Limited (“Geo Energy”). Forward looking statements are notguarantees of future performance and may and often do differ materially from actual results. There is no certainty or assurance as at the date of this presentationthat any transaction disclosed in this presentation will proceed or be completed or that no changes will be made to the terms thereof. Important factors thatcould cause these uncertainties include, but are not limited to, those discussed in Geo Energy’s Annual Report 2018 and/or the offering memorandum dated 27September 2017 in relation to the US$300 million 8.00% senior notes due 2022 offering by Geo Coal International Pte. Ltd., a wholly-owned subsidiary of GeoEnergy. Neither Geo Energy nor any of its associates or directors, officers or advisers, provides any representation, assurance or guarantee that the occurrence ofthe events expressed or implied in any forward-looking statements in this presentation will actually occur. You are cautioned not to place undue reliance on theseforward-looking statements which only speak as of the date of this presentation. Other than in accordance with its legal or regulatory obligations (including underthe listing rules of the Singapore Exchange Securities Trading Limited), Geo Energy is not under any obligation and Geo Energy and its affiliates expressly disclaimany intention, obligation or undertaking to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.This presentation shall not, under any circumstances, create any implication that there has been no change in the business or affairs of Geo Energy since the dateof this presentation or that the information contained herein is correct as at any time subsequent to its date. No statement in this presentation is intended as aprofit forecast or a profit estimate. This presentation does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer topurchase or subscribe for any securities. The making of this presentation does not constitute a recommendation regarding any securities. Shareholders, investorsand other persons are advised to exercise caution in trading the securities of the Group.

© G E O E N E R G Y R E S O U R C E S2

GEO ENERGYFTSE-ST Index company and rated as one of the fastest growing companies in Singapore

Geo Energy Resources Limited, together with itssubsidiaries (“Geo Energy”) (Bloomberg Ticker:GERL SP) is a coal mining group, establishedsince 2008, with offices in Singapore andJakarta, Indonesia and production operations inKalimantan, Indonesia.

Geo Energy is one of the major coal producers inIndonesia and was listed in the Singapore StockExchange in 2012 and is part of the SingaporeFTSE-ST Index. The Group was ranked 17th in theinaugural award for Singapore’s FastestGrowing Companies 2019 presented by TheStraits Time and Statista based on the strongestrevenue growth in recent years.

Geo Energy owns four mining concessionsthrough its wholly-owned subsidiaries, namelySDJ, TBR, BEK and STT in Kalimantan,Indonesia and is working in collaboration withworld-class business partners such as BUMA,Macquarie and Trafigura.

Increasing coal reserves through strategicacquisitions is core to Geo Energy’s strategy,having delivered a demonstrated track recordin pursuing and executing coal acquisitions inIndonesia. Successful acquisitions include BEKin May 2011, SDJ in Aug 2014 and TBR in Jun2017, which have transitioned Geo Energy frombeing primarily a coal mining service providerto a leading Indonesian coal producer today.

Geo Energy has a management team withover 50 years of experience in the coalindustry, trading, mining and operatingmines, accounting, financial management,treasury and M&A. Geo Energy is backed byreputable Board of Directors including JimRogers, who is a globally renowned financialcommentator and successful internationalinvestor, and supported by a specializedpanel of advisors with a track record ofsuccessfully navigating the Indonesianregulatory environment.

For more information, please visit www.geocoal.com


http://www.geocoal.com/



Our Strategy

Portfolio

• Negotiating to lower cash costs with our suppliers (mining contractor and logistic operator) to tie to the current coal price

• No CAPEX with prepayment facilities from major coal offtaker, who have great credit ratings and international standing to support Geo’s operation

• Drive growth to create value for our stakeholders

Sustain-ability

• Looking for new acquisitions that meet the USD bond covenants - the combined JORC reserves of Geo and the new acquisition will have >120Mt and is a producing mine whereby the put option will fall off

• Not looking at smaller (not economical and efficient for our mining contractor) or bigger reserves assets (which ties up our cash investments and takes more than 10 years to mine)

• Operating a safe, responsible and profitable business with ESG focus• Collaborating to enable long-term economic benefits

GEO ENERGYFTSE-ST Index company and rated as one of the fastest growing company in Singapore

5 © G E O E N E R G Y R E S O U R C E S



An Insight Into Our Leaders

Our leaders have invaluable experience in the coal mining and commodities industry, investment, and corporate finance to drive growth to meet strategic objectives to create value for our stakeholders.

(Please refer to the Board of Directors profile in the Annual Report)

Mr Rogers is the author of seven books and is a globally renowned financial commentator as well as a successful international investor. He was the co-founder of the Quantum Fund and Soros Fund Management. He was also the creator of the Rogers International Commodities Index (RICI).

Mahfud MDSpecial Advisor to Geo Energy. He has formerly served as the Chief Justice of the Constitutional Court of Indonesia as well as the Minister of Defence and Minister of Justice and Human Rights of Indonesia.

M. Ryaas RasyidPresident Commissioner. He served as Minister of Local Autonomy, the Minister of State Administrative Reform, a Member of National Parliament and a Member of Presidential Advisors in Indonesia.

https://en.wikipedia.org/wiki/Quantum_Group_of_Funds

https://en.wikipedia.org/wiki/Soros_Fund_Management

https://en.wikipedia.org/wiki/Rogers_International_Commodity_Index



Gold Award for Best Investor Relations (“IR”)

Geo Energy won the Gold Award for the Best IR for SGX listed companies (Market cap <S$300m) at the 2019 Singapore Corporate Awards.



Awards Recognition

WE CAN DO MORE WHEN WE WORK TOGETHER

3 TIME ACHIEVEMENTS

Most Transparent company award 2013-2015

SIAS Investors’ Choice Awards

SGX FTSE INDEX Member

SINGAPORE BUSINESS REVIEW AWARD Winner SGX-listed company (Metals and Mining)

Creative Awards

2018

Singapore Fastest

Growing company

Corporate Governance and

Transparency Index

Won GOLD at Hermes Creative Awards 2018 for

the best design of our Annual Report 2017 – “The Year

That Transformed Geo Energy”

Ranked 17th Singapore’s

Fastest Growing Companies 2019 presented by The Straits Times and Statista based on

the strongest revenue growth in

recent years

Ranked 35th in the Corporate

Governance and Transparency

Index 2018, placed amongst the top listed companies

2Q2019 PERFORMANCEReturn to Profitability on a Lower Net Profit

51.9 65.7

117.7

2Q2019 1Q2019 1H2019

1.4 2.1

3.5

2Q2019 1Q2019 1H2019

15.3

3.7

19

2Q2019 1Q2019 1H2019

36.1

62

98.7

2Q2019 1Q2019 1H2019

Revenue(US$ million)

Coal Sales(million tonnes)

Cash Profit(US$ million)

Cash Cost(US$ million)

US$200M

CASH

US$163M

NET WORTH

US$0.8M

NET PROFIT

US$555M

TOTAL ASSETS

US$392M

TOTAL LIABILITIES



The Group sold 0.4 million tonnes of 4,200 GAR coal from the SDJ coal mine and 1.0 million tonnes from the TBR coal

mine, totalling 1.4 million tonnes of coal sold during the quarter. This was a decrease from 2Q2018 and 1Q2019 of 2.0

million tonnes and 2.1 million tonnes respectively.

Key Highlights

Revenue decreased by 38% from US$83.2 million in 2Q2018 to US$51.9 million mainly due to lower ASP following

the decrease in the average Indonesian Coal Index price in 2Q2019 as compared to 2Q2018. The Group recorded an ASP

of US$36.54 per tonne for 2Q2019, lower than US$42.24 per tonne in 2Q2018.

Cash profit for coal mining segment for 2Q2019 averaged at US$10.76 per tonne (2Q2018: US$13.06 per tonne;

1Q2019: US$1.80 per tonne) against the ASP of US$36.54 per tonne for 4,200 GAR coal, giving a cash profit margin of 29%.

Average production cash costs of US$25.78 per tonne in 2Q2019 was a decrease from US$29.18 per tonne in

2Q2018 and US$30.24 per tonne in 1Q2019. Production in 1Q2019 was affected by the increases in overburden hauling

distance, fuel price and increased strip ratios. The temporary increase in OB distance was due to the disposal of

overburden at the further end of the dumping site based on the current mining plan. The Group is reviewing and

optimising the mining plan to reduce the OB distance from this quarter.



The RKAB for SDJ for 2019 is lower than 2018, although the total production quota for the Group (including TBR)

was increased in 2019 over 2018. The lower production quota for SDJ resulted in lower production and sales quantities

from the SDJ coal mine. The Group had achieved its DMO requirements for 1H2019 and barring any unforeseen

circumstances, is expected to meet its full year DMO requirement in 2019. The Group has applied for a review of its

2019 RKAB to increase the Group’s production quota by 2 million tonnes for SDJ and expects results to be known by

3Q2019.

Key Highlights

Geo Coal International Pte. Ltd., a subsidiary of the Company, signed a New Offtake with Trafigura for the remaining

life of mine of SDJ less its domestic market obligations (“DMO”), with a minimum annual commitment of 5 million

tonnes of coal during 2020 to 2022.

Currently performing the due diligence process for the non-binding offer (which was submitted in December 2018)

for a potential acquisition of a new coal asset (producing mine) in East Kalimantan, Indonesia. If satisfactory, the

Group is expecting to submit a binding offer according to the transaction process by end August 2019 or early September

2019. J.P. Morgan has been appointed as the financial advisor for this potential acquisition. The Group is also

performing a due diligence for a binding offer on a new coal asset (producing mine) in South Sumatra. We will

make the appropriate announcement in due course.



Market Price Analysis

The average ICI price for 4,200 GAR coal was

US$37.56 per tonne in 2Q2019, up from US$35.49

per tonne in 1Q2019 but down from US$44.84 in

2Q2018.

The Group recorded an ASP of US$36.54 per tonne

for 2Q2019, higher than US$32.04 per tonne in

1Q2019 but lower than US$42.24 per tonne in

2Q2018. The lower ASP compared to the ICI price

was due to our pricing based on the average index

prices of the month in which laycan takes place (for

TBR coal).0

20

40

60

80

100

120

140

NWC ASP ICI

33.5

35.543.5

36.5

2Q2019

79.9

104.5

117.5

104.495.9

44.8

41.5

37.6

42.235.2

32.0

2Q2018 3Q2018 4Q2018 1Q2019


INDUSTRY UPDATECoal Prices expected to decline gradually in 2H2019

According to McCloskey report, Indonesia sub-bituminous and low-ranked prices started to soften with Indonesia low-ranked traded at US$35.25-US$36.00 per tonne FOB, basis 4,200 kc GAR, for July and August loading geared vessels, despite a return of heavy rains to major mining regions in Kalimantan in June that has affected supply. Thermal coal price continued to trend down due to quick coal production ramp-up ahead of the summer season, sufficient inventory levels at the key independent power producers in China and lacklustre thermal power generation. With an additional 160 million of newly approved coal capacity in 1H2019 coming on stream and softening demand amid concerns over slowing economic growth, the thermal coal prices expected to decline gradually in 2H2019.

There have been request from miners to revise the quota upwards for the rest of 2019. The Directorate General of Minerals and Coal in Indonesia stated that the request is currently being evaluated whether to increase the production quota and results will be announced at end of July or early August. Miners that are looking to increase output will have the domestic market in mind. In China, domestic market coal consumption at six major coastal power plants increased by 36,700 tonnes per day to 634,100 tonnes per day as of 9 July 2019.

Source: UOB Kay Hian Greater China Daily Report, 22 July 2019, McCloskey Issue 464, 12 July 2019, https://www.argusmedia.com/en/news/1936972-lowcv-indonesian-coal-prices-steady-to softer?

We have achieved the DMO requirements for the 6 months ended 30 June 2019 and barring any unforeseen circumstances, we expect to meet the full year DMO requirement in 2019. We have applied for a review of our 2019 RKAB to increase our production quota by 2 million tonnes for SDJ and expect results to be known by 3Q2019.


INDUSTRY UPDATECoal remains the single largest source of energy for the world

Coal still accounts for about 40% of global power supply, unchanged for many years and demand of energy will continue to grow as the world population grows and countries in Asia industrialise. Coal remains the single largest source of energy for the world and will continue to do so for decades to come. Indonesia has made gains in volumes into China which was likely due to China’s stronger demand for low-ranked coal for blending. In addition, Indonesia is expected to add some 50 million tonnes a year of coal-fired power demand by 2023, a rise of 55% from 2018 making it one of Asia’s biggest consumers.

Vietnam’s coal demand outpaces domestic output in the first half of 2019, with power, steel and coal production all rising significantly, albeit with coal output still lagging the country’s demand. Coal import to Vietnam were up 102% with Indonesia as the main leading import origin. Coal-fired power generation on the Coal is the largest contributor to the power generation mix in Malaysia. Malaysian Peninsular was up 4% in 1H2019.. According to IHS Markit’s latest forecast, Malaysia is expected to import 36.2 million tonnes of thermal coal in 2019 and by 2021, Malaysia imports are expected to reach around 40 million tonnes per year.

Trafigura is one of the largest physical commodities trading groups in the world. The coal delivery under the new offtake with Trafigura will commence in January 2020. The agreement with Trafigura as SDJ’s new offtaker will enable us to gain new market reach.

Source: McCloskey Issue 464, 12 July 2019, McCloskey Issue 463, 28 June 2019, https://www.cnbc.com/2019/07/04/reuters-america-future-tense-fastest-growing-market-asia-rethinks-coals-prospects.html


FOR INVESTORRated by international credit agencies, global investors and financiers

Strategic Investors/Financiers

Equity capital markets

BanksStrong ongoing relationships and trade

facilities with banks

Debt CapitalRepeated SGD/USD bond issuer, including Oct

2017 US$300m notes oversubscribed at

US$1.2bn, where J.P. Morgan, Deutsche Bank,

BOCI, and CITIC are JBRs / JLMs

Offtake prepayment

Coal Off takers funding

SOURCES OF CAPITAL

Rated by international Credit Agencies, Moodys’, Fitch and S&P and with global investors and financiers.

B- Negative

B2 Negative

B Negative



Share Price Performance

Geo Energy market capitalisation as of 27 August 2019 is S$210 million.

Last quote as of 27 Aug 2019



Bond Price Performance

The price for our Senior Note is traded at US$77 as at 26 Aug 2019.

Last quote as of 26 Aug 2019


THANK YOU

OUR KEY FOCUS IS CREATING SUSTAINABLE STAKEHOLDER VALUE BY OPTIMISING OUR OPERATIONS

FOR LONG-TERM ECONOMIC, SOCIAL AND ENVIRONMENTAL

BENEFITSFor more information, please visit

www.geocoal.com

18

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